For a Central Bank serving the citizen

 7500 euros: this is the amount that every citizen of the euro area would have received if the European Central Bank (ECB) had distributed directly to the population the 2.6 trillion euros it has preferred to inject into the financial markets since Four years.

This shocking figure, revealed by the NGO Positive Money Europe, poses a simple and radical question: would not monetary policy be more effective if the newly created money was directly paid to European households?

By pouring trillions of euros into the financial system since 2015, the ECB has certainly helped to stem the euro crisis. The other side of the coin is that all this extra money has irrigated the real economy only in a small proportion. This explains why the ECB is failing to achieve its primary objective of aiming for an annual inflation rate of close to 2%.

Where did the money go then? It basically went to inflate the prices of all kinds of financial assets. So much so that the monetary policy of the ECB has led to an increase in inequalities between citizens: it is mainly the rich who have benefited from rising stock prices and real estate prices, while low incomes have budget restrictions imposed by European governments. Thus, the argument of the ECB that low rates also benefit young people wishing to acquire a first home is illusory since the rate cut is offset by an increase in property prices. Admittedly, credit rates are lower, but you have to go into debt twice more and for longer …

the President-designate of the ECB

By taking office at the head of the ECB on November 1, Christine Lagarde will have to remedy this negative social report. Interviewed by MEPs at the beginning of September, she remained vague about this: although she did not explicitly mention the idea of ​​freeing money for European households, Mario Draghi’s successor did not rule out the possibility of using new unconventional tools in the future.

But the fight against inequalities is far from the only challenge that awaits it.

With regard to the climate issue, the Frankfurt institution also has a very bad newsletter. In this area, its software remained stuck in the 1950s. Quick updates will be necessary to Ms. Lagarde to green monetary policy.

A single figure makes it possible to measure the extent of the problem: more than 60% of the securities bought by the ECB have financed companies working in the most emitting sectors of greenhouse gases [1].

For example, multinationals such as Total, Daimler and BMW have benefited from the ECB’s private debt buyback policy. Conversely, the green economy sectors are under-represented.

It’s absurd. And it is especially irresponsible on the part of an institution as powerful as the European Central Bank.

During her hearing in Parliament, Christine Lagarde nonetheless made encouraging remarks about the climate issue.

On a personal level, she spoke in favor of mainstreaming the fight against climate change into the ECB’s mandate. It has also been open to reorienting the Bank’s balance sheet towards green assets, provided that a clear definition of what is sustainable is adopted at European level. Finally, she acknowledged that the ECB will have to gradually eliminate the financial securities of the polluting companies it holds on its balance sheet.

In order to engage the ECB in the fight against climate change, Lagarde will nevertheless have to obtain the consent of the 24 members of the institution’s board of governors, which is a challenge [2].

Alongside the social and environmental challenges, Christine Lagarde will face a third major challenge: to improve the democratic accountability of the institution.

In the aftermath of the eurozone crisis, the ECB has significantly expanded its functions and means of action. But these increased powers have not been accompanied by a strengthening of the rules on transparency, integrity and accountability of the Bank.

To remedy this, Ms. Lagarde will quickly adopt measures to prevent conflicts of interest that may affect members of the Executive Board, to make public meetings with lobbyists, or to publish its decisions and recommendations. Likewise, it will have to involve the European Parliament and civil society more closely in debates on the future revision of the monetary framework.

Only the future will tell if Mrs Lagarde will have been able to speak the truth in order to answer this triple challenge that awaits the ECB.


  • [1] BATTISTON, S., MONASTEROLO, I., March 22st, 2019, “How could the ECB’s monetary policy support the sustainable finance transition?”, Https://
  • [2] Some members of the Governing Council may find it difficult to depart from the “market neutrality” principle that the ECB has so far held: it forces the Bank to buy the financial assets that are proportionally, without favoring certain sectors at the expense of others. However, it is the most carbonaceous that dominate the economy.

Helicopter money is the new “whatever it takes”

Exactly seven years ago, the President of the European Central Bank, Mario Draghi, pledged the ECB would do “whatever it takes” to preserve the euro. Those few words will be remembered as a decisive step towards the end of the Eurozone crisis, as it paved the way for the launch of quantitative easing (QE).

But QE only managed to push the problem further down the road, and the ECB is once again worried about an economic slowdown. This month, the ECB has announced that it will consider more policy support to the Eurozone economy, including relaunching QE.

Some voices are saying the ECB should start buying equity stocks [1] as part of quantitative easing. This is what Blackrock (the world’s largest asset manager) suggested last week. Everyone can guess who would benefit most from this.

We, on the contrary, argue that 7 years after Draghi’s heroic “whatever it takes” speech, more of the same policies will not be good enough anymore. The European Central Bank needs to find new ways that will benefit all citizens, not just the banks, asset managers and the financial and corporate elite.

The ECB should clearly commit to deploying “helicopter money” – direct transfers of newly created money to EU citizens – if it needed to. Read why helicopter money is the new “whatever it takes” here.

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Helicopter Money is liked by 54% of Europeans

Recent survey shows that a broad majority (54%) of the European population would support a “helicopter money” from the European Central Bank while only 14% would be against.

In case this wasn’t already obvious already: most Europeans would like to receive money directly from the ECB. This idea, which is most known under the nickname ‘helicopter money’ is gaining traction since the CB engaged in quantitative easing back in 2015.

recent survey carried out by the polling company Ipsos for the Dutch bank ING shows that no less than 54% of the respondents think ‘helicopter money” would be a good idea, while only 14% are against. Continue reading “Helicopter Money is liked by 54% of Europeans”

  Helicopter money and a basic income

How the Bank of England might create new money to pay into the economy as  a Basic Income

In televised debates during the recent general election campaign, several politicians made reference to there being no “magic money tree”. When in fact, there sort of is. This, together with a survey in 2014 that showed that only one in ten MPs know where money comes from, exposes a huge education gap amongst our most powerful elected officials, on one of the most important aspects of our economy: money. Continue reading ”  Helicopter money and a basic income”

MEPs call on Mario Draghi to consider helicopter money

Eighteen members of the European Parliament have signed an open letter to the Head of the European Central Bank, emphasizing the need to consider “helicopter money” — a proposal to distribute money directly to people as a citizens’ dividend.

Some advocates argue that a basic income should be financed by “helicopter money” — the printing of new money by central banks for direct distribution to individuals. To be sure, the policy is contested, even among basic income supporters. Many suggest redistributive policies to fund a basic income, as opposed to the creation of new money, and some have vocally opposed helicopter money. Continue reading “MEPs call on Mario Draghi to consider helicopter money”

Helicopter money or European Unconditional Citizens Income?

Somewhere in March 2015, the European Central Bank (ECB) launched its long-awaited programme of quantitative easing (or QE), adding lots of public debt to the private kind it has already been buying. Its monthly purchases will rise from around €13 billion ($14 billion) to €60 billion until at least September 2016. The ECB is just the latest central bank to jump on board the QE bandwagon. Most rich-economy central bankers began printing money to buy assets during the Great Recession, and a few, like the Bank of Japan, are still at it. But what exactly is quantitative easing, and how is it supposed to work? Continue reading “Helicopter money or European Unconditional Citizens Income?”

Can helicopter money kick start the Eurozone?

With Eurozone growth still sluggish, should the European Central Bank (ECB) consider a radical option – like helicopter money?

ING senior economist Teunis Brosens explains, in this eZonomics video, that the ECB has already employed quantitative easing[1] and lowered interest rates below zero. But how effective these measures will be is unclear, he says.

Continue reading “Can helicopter money kick start the Eurozone?”

What is helicopter money?

Helicopter money is a reference to an idea made popular by the American economist Milton Friedman in 1969.

In the now famous paper “The Optimum Quantity of Money”, Friedman included the following parable:

Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated.”

The basic principle is that if a central bank wants to raise inflation and output in an economy that is running substantially below potential, one of the most effective tools would be simply to give everyone direct money transfers. In theory, people would see this as a permanent one-off expansion of the amount of money in circulation and would then start to spend more freely, increasing broader economic activity and pushing inflation back up to the central bank’s target. Continue reading “What is helicopter money?”